More Lessons in Digital Operating Basics from Ram Charan. Part 2 of 2 on “Rethinking Competitive Advantage”. (Asia Tech Strategy – Podcast 99)

This week’s podcast is my second on Ram Charan’s new book “Rethinking Competition Advantage“. I think it has a lot of great insights about the basics of digital operations.

You can listen to this podcast here or at iTunes and Google Podcasts.

Here is my summary of digital operating basics (Dr. Ram’s book combined with some of my own thinking):

  1. Scale and growth at small incremental cost.
    1. Target a real or imagined 10x or 100x market space. Disrupt an existing space or create a new one.
    2. Imagine an end-to-end experience in a customer’s life that could be greatly improved.
    3. Have the confidence that you can overcome whatever obstacles may encounter.
    4. Growth and scale without cost or constraints is one of the great advantages of digital.
  2. Continuous personalization and customer-facing innovation.
    1. An improving and personalized customer experience is key to continued value-add and growth.
    2. It enables new products and services and cross-selling more and more products and services to a larger and larger audience.
    3. A “market of one” is the ultimate personalization.
  3. A digital core for operations.
    1. Being a data-driven company is critical for speed, smart decision-making and incremental improvements and innovation.
    2. Algorithms and data are essential weapons. Combining and refining algorithms over time “can be a competitive advantage” But not always. It is mostly about continuously making changes and frequent incremental improvements. This combined with speed is tough for physical competitors to beat.
    3. Dynamic pricing – for markets and individual consumers.
  4. Ecosystem and connectedness.
    1. Companies need to be used to dealing with partners – and not stand-alone islands in a changing and evolution ecosystem. Every major player needs at least 10 partners for sharing data, meeting a range of consumer preferences, growing faster than it otherwise could and continually refreshing with technology and innovation.
    2. Connectedness is one of the strengths of digital. It is critical for adapting in complex and changing ecosystem. It also feeds data to the digital core.
  5. People, culture and work design create a social engine that enables innovation and execution – increasingly personalized for each customer.
    1. Decision-making is designed for innovation and speed. Think Teams, not organizational layers.
  6. Money-making at scale makes the company sustainable. It enables continuous innovation, including big bets where the ability to withstand losses is important.
    1. Companies need powerful moneymaking models that capture the benefits of digital scale. Target a big opportunity and increases cash gross margin by innovation and cost reductions over time.
    2. Use cash flow to improve innovation and technology. That can fund multiple experiments against consumer experience. Add that can revenue streams on top of the same digital core and customer base.

Here is the “Towson Tower” (I like that term):

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Related articles:

From the Concept Library, concepts for this article are:

  • Digital Operating Basics

From the Company Library, companies for this article are:

  • n/a

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